Rampant nutrition business acquirer, Royal DSM, has splashed the cash for the ninth time in two years – this time to the tune of €495m ($634m) on US-based multinational nutrient blending giant, Fortitech (€212m/$270m annual turnover).

The buy boosts its range with flavours, sweeteners, botanical extracts, caffeine, seasonings, proteins, sweeteners and enzymes, with only vitamins and carotenoids being areas of significant overlap.

DSM board member Stephan Tanda told us this morning that the buy that consolidates the Dutch giant as the biggest nutrient provider in the world, was the last major purchase the Dutch-Swiss firm would make for, “12-18 months”.

“We are done for awhile and will now focus on 12-18 months of integration,” Tanda said. “We’ll make sure the business cases fully deliver on the bottom line.”

However Tanda said smaller deals were not out of the question. “We may do €50m here, €60m there if the right opportunity comes along. But the sizeable deals in the hundreds of millions, we will take a pause for the next 18 months.”

Since 2012, DSM has spent around €2.4bn on nine acquisitions in human and animal nutrition, including Cargill's cultures and enzymes business and omega-3 giants Ocean Nutrition Canada and Martek BioSciences – expanding the division’s turnover to an expected €4.6bn.

The purchase price-EBITDA ratio of 9 is in line with Martek (€730m; ratio of 7.3) and Ocean Nutrition Canada (€420m; ratio of 9). Its recent animal nutrition buy – Tortuga – had a ratio of 7.8. DuPont's €4.5bn Danisco buy had a ratio of 14.9.

“We think this is a fair price for both seller and buyer,” Tanda said.

Despite most its still sizeable acquisition war chest being spent in nutrition, Tanda said DSM had no intention of shutting down its other divisions.

“Performance materials still delivers €4.5bn and pharma is about €1bn so there is no intention to sell those businesses off. It is better to stand on two legs than one. I do not see a change in the future of this strategy.”

More on Fortitech

With facility rationalisation and avoided capital expenditure, along with staff synergies the Fortitech buy is expected to bring about €55m in short term savings, with greater savings expected going forward, amounting to about 10% of turnover by 2015.

Fortitech does 52% of its business in North America, 18% in Europe, 16% in Latin America and 13% in Asia. It has six production sites: two in the US, and one in Denmark, Brazil, Poland and Malaysia.

“This trend to outsourcing from major food companies and also dietary supplement companies and infant formula companies allows us to take a larger share of the formula. You can grow at higher rates by doing more and more of this business that historically used to be done by the customer.”

Other areas DSM will gain a proficiency in among Fortitech’s 1400-strong ingredient portfolio include colours, nucleotides and amino acids.

Anti-trust issues are not expected, Tanda said.

Leendert Staal, president and CEO of DSM Nutritional Products, said: “The acquisition of Fortitech is another very important step towards the implementation of DSM’s Nutrition strategy. It will help us to expand our value chain presence and to deliver more value to our customers. With Fortitech DSM will be able to deliver customised food ingredient premixes and blends to our customers while at the same time strengthening our international footprint."

"Fortitech will become an important part of the Human Nutrition and Health business within DSM Nutritional Products. I look forward to welcoming Fortitech’s 520 employees to DSM.”

DSM estimates EBITDA profit for 2013 of €1.4bn although most analysts are forecasting €1.3bn.

This content is copyright protected

However, if you would like to share the information in this article, you may use the headline, summary and link below:

Rampant nutrition business acquirer, Royal DSM, has splashed the cash for the ninth time in two years – this time to the tune of €495m ($634m) on US-based multinational nutrient blending giant, Fortitech (€212m/$270m annual turnover).

Related products

Live Supplier Webinar

30-Mar-2015 - Insights from the aisles are vital for all product formulators and brand owners, but what are the key issues affecting retailers?
How do retailers communicate with consumers?
How is the rise of the online retailer changing the landscape?
What are the key trends...

Video

10-Feb-2015 - Magnesium is needed for over 360 biochemical functions in the body, from energy production to sleep. But it has little benefit if the body cannot absorb or tolerate it. See what Albion’s scientists discovered when they bound magnesium to amino acids such as glycine,...

Data sheet

02-Mar-2015 - In January, several NGOs, scientists and businesses officially came together to help fund important research projects in Antarctica. Organized under the Antarctic Wildlife Research Fund (AWR), these entities will actively raise money for research into krill, a small crustacean that has...

Research study

22-Jan-2015 - Magnesium is required by over 360 biochemical functions in the body, from energy production to sleep. But, it has little benefit if the body cannot tolerate or absorb it. Learn which forms of magnesium provide the greatest absorption, stability and tolerance. Find out...

Research study

24-Mar-2015 - To determine the benefit of low dose oral cetylated fatty acids (CFA) on function and pain in subjects with moderate Osteoarthritis (OA) of the knee, a total of 93 subjects were evaluated at baseline, and again at 4 and 8...

Technical / white paper

17-Mar-2015 - Inflammation affects heart health, arthritis and many other health issues – and growing evidence suggests that nutrition is part of the solution. Seize this opportunity with custom nutrient premixes.Any nutrient. Any application. Anywhere in the world.

Technical / white paper

25-Feb-2015 - Beauty from Within is a strong growing category. It has promising future in the US especially if we educate the consumers. This White Paper presents some of the key drivers such as delivery systems but also ingredients with strong science...

Clinical study

10-Feb-2015 - Millions of health conscious consumers are looking for nutritional support to help maintain healthy cholesterol levels. With numerous studies supporting Pantesin’s effectiveness in high-risk subjects, current research shows that it is also effective for low to medium risk individuals. This...